Stiglitz scores on credit system overhaul

Start with a closed end e - money system
Then
Use
"The central bank (government) auctions off the
rights to issue new credit."Nb :

"The system is symmetric. The central bank may decide that there is too much money in the
economic system—that is, the banks are lending too much, using “money” that they receive in
repayment. In that case, the government can buy back rights to issue credit: they buy back the
money that they have allowed the banks to effectively manage on their behalf. Again, there can
be an open auction for those most willing to give up rights to issue credit. This would literally
drain money out of the banking system. "

"The government would allow for entry into the
banking system; indeed, separating the depository and lending functions and
the open auction of rights to issue credit should make entry easier, and thus
competition more vigorous " "Entry would presumably occur to the point where the before‐tax return to capital (measured
over the business cycle) would be slightly in excess of the normal return to capital. Some excess
return may be necessary to induce more responsible social behavior on the part of bankers."

For example

" if the
economy is weaker, it will provide more credit to stimulate the economy" "Note that in this system, banks cannot create credit out of thin air, and the
amount of money being created each month is known with considerable
precision."

"Conditions would attach to selling the “rights to lend” to the banks.
Minimum percentages of the loans would go to small and medium-size
enterprises and to new enterprises or to underserved communities; a
maximum would go to real estate lending (perhaps apportioned by location,
on the basis of local changes in prices), to purchases of other existing assets,
or to those engaged in speculative activities, like hedge funds. None would
be allocated to socially proscribed activities, like those contributing to global
warming or associated with the promotion of death, such as cigarettes. In
short, there would be minimum standards for social responsibility. There
would be limits on the interest rates charged. Discriminatory lending
practices and other abusive practices by credit card companies would be
proscribed. So, too, would connected lending. "